RICHARD MORNINGSTAR: Thank
you. And good morning, everybody, and
welcome to “The Great Gas Debate,” which I think you’ll find to be very
interesting and I hope entertaining as well.

You all know about the shale gas revolution in the United
States and the effect that gas has had on reducing emissions in the United
States and replacing coal in many instances.
But when we talk about gas it generates a huge amount of debate, of
which there are several different – at least four different views that we’ve
come up with which we want to talk about today during the panel session.

There are some who believe that gas should just play no role
in the global energy mix; that it should have – that it’s a fossil fuel, it
should be disregarded, and not play any role.
Others think that gas will be an enabler for key game-changing renewable
technologies; not just solar, wind, and so forth as a – as a complementary
source, but also in working through making hydrogen a reasonable source and a
good source as a new technology. There
are some who would take the position that gas is a necessary bridge fuel and
will be a critical, critical part of shifting the energy mix away from coal,
particularly in high-demand regions such as Asia. And then some who literally have called gas a
destination fuel and provides the clean baseload energy needed for the
developed world to grow.

Those are some of the particular issues. There are sub-issues – some who would argue
that just bringing, you know, gas infrastructure and developing gas
infrastructure will delay new technologies because of the costs and lifespans
of those – of that infrastructure. Also,
the issue of reducing the environmental concerns with respect to gas production
and how significant that can be.

So what we’re going to do is we’re going to have a poll in
which basically those four points that I made will be part of the poll, maybe
even in a somewhat simpler manner. And
it’s not up yet. I hope it will go up
there on the screen. And I would
appreciate if most of you or all of you could vote with respect to what you
believe with respect to those four, and we’ll see what you say. And then maybe after all the presentations
we’ll vote again to see if anybody has succeeded in changing your mind.

So on that score – having said that, I would invite the
panel to come out onto the stage and we can begin our discussion. I’ll be asking questions of the
panelists. There will be no – here, come
right ahead. There will be no opening
presentations as such. And then we’ll
leave time for audience participation.

Let me introduce our esteemed group of panelists. I’m going to give very brief introductions
because you have the full biographies in their – in your – on your app or in
whatever materials you have.

First we have Fatima Al Nuaimi, who is the chief executive
officer of ADNOC LNG. So we’ll have –
she’ll be an important contributor.

Marco Alverà, who is the CEO of Snam, which is the – one of
the largest utilities in Europe, an Italian company, who has very interesting
and I think progressive views with respect to gas.

Adnan Amin, who I will say first is a distinguished senior
fellow at the Atlantic Council, and also say that he is the – was the first and
longtime director-general of IRENA, the International Renewable Energy
Agency. And, Adnan, I think you’re
responsible for putting IRENA on the map.

And then, finally, Tom Earl, who’s the chief commercial
officer of Venture Global LNG, a U.S. company.
And he’ll have his views as well.

So I’m going to get off of my feet because I don’t think I
can stand for an hour, even though – even though the people who are running the
show think the moderators should stand for an hour, and then we’ll get into –
get into the questions. You will note I
have sort of sneakers on, but – (laughter) – but anyway.

So let’s start. And
we’ll start with you, Madam Al Nuaimi, and ask you the role that you see
natural gas playing in the energy transition – how it can work in developing
countries, your views how some of the environmental impacts can be addressed in
gas production.

FATIMA AL NUAIMI:
OK. Salaam aleikum and good
morning, everybody.

Well, the title of such a panel is quite unique because a
couple of years ago nobody raised this question. It was a given. It was promoted, like, that natural gas and
LNG, as the cleanest of fossil fuel, is an integrated part of the future energy
mix. And this has been proven in many
cases.

If I just talk about ADNOC LNG, for example, we were
established to address such challenge that our partners in Japan were facing,
to address their energy security as well as their quality of air back in the
’70s. And today this example repeats
itself; as the percentage of gas increases in the power sector or the energy
mix, you see declining emissions.

I was reading just last night about Germany this summer
having bigger percentage of gas in their energy mix during the summertime, and
contributed to lowering their CO2 emissions by one-third. And of course, there was an economical factor
to it because gases were – gas were very – was very economical and lower prices
this summer.

The U.S. is also, because of the shale and availability of
gas, the availability of gas made it easier to be part of their power sector,
and witnessed lowest emissions since the mid-’80s.

So that’s the line that, as LNG or gas sellers, we always use,
that it’s the cleanest of the fossil fuels.
And the question on energy mix is not simple. It cannot be addressed or it cannot be
answered by just, let’s say, emotional factors.
It’s very complex. It takes into
consideration so many variables.

Nations, when they decide on their energy mix, they take
into consideration the environmental impact, of course; having an economical
source; having it accessible; and security of supply. And to me, gas takes all of the above.

In terms of reliability, this is a source of gas that – this
is a source of energy that does not rely on the days or months – days of the
month where wind is blowing or sun is shining.
So in terms of reliability, it’s there as long as you have access to the
– to the source of gas.

And if I talk specifically on LNG, LNG bridged some of the
geopolitical constraints that pipeline gas previously raised. And as in the past 10 years we have more
nations joining the club of gas, so access today is available. We’ve seen examples of countries like
Pakistan, for example, bridging their requirement of gas because of the
declining local resources by just hooking into an FSRU and to this available,
abundant source.

So in terms of reliability, availability, and economics as
well – and I think Tom will be talking about the evolution and the progress of
technology and how this is contributing to making it more economical – all of
this is ticking the box.

But still, as a mother and as a citizen of the world, I
cannot say and use that line. Global
warming, the disasters that the world is witnessing every day, is something of
reality. So we cannot just ignore that.

So there is a responsibility on the industry to address –
even if we are talking about emissions being half of that of the CO2, we have
to address that there are some emissions happening because of the burning of
gas and fossil fuels. So in my view, we
cannot isolate future gas development from capturing the carbon, CCUS programs,
to be associated and part of it.

The other part, as an industry we should not be just working
as defending the gas; we should also educate the public about the benefits of
natural gas as an integrated part of the energy mix. People’s behavior drives a lot of the
consumption trend.

There is an example I keep giving all the time. People who have seen me talk, maybe they
would remember this. I used to work on the
– on the gas supply section in ADNOC, and – to the local power plants. And it was August. It was the peak of summer. And I was having a debate with the power
company where they want to consume gas above the quota and the contract to cater
for the heatwave that we had. So it was
a tough meeting. I finished that meeting
and I wanted to relax, so I went to a spa.
And that spa – it was August – temperature was above 45 (degrees). And in that spa I come into the room and
there is a heater in the room. And I
told the therapist, so what is this for?
She said, because it’s central cooling system in the whole club, and
there is a gym, and we want to keep people who are exercising cold, but the spa
rooms are too small so we put a heater.
So we have air conditioning on the highest and we have a spa room with a
heater.

MR. MORNINGSTAR:
That’s a fantastic story.
(Laughs.)

MS. AL NUAIMI: So
that – it was not relaxing time I spent in the spa – (laughter) – definitely.

So people’s behavior also need to change because we keep
talking about the energy mix. We keep
talking about what fossil fuels or what renewables we put into the – to
this. But at the end of the day we have –
in society or in the globe we have people who do not have access to the basic
necessity. You have a kid who needs to
go to the street to do his homework because they don’t have access to
power. And you have different people who
are misusing the energy.

Thank you.

MR. MORNINGSTAR:
OK. Well, thank you. Thank you very much. I take it also from your comments that you
would – that you believe that gas and renewables are not a zero-sum game, that
you can have both and that gas can be a contributor to renewables.

MS. AL NUAIMI: I don’t think we can have it any other way,
frankly. It’s complementing each
other. It’s not just about – it’s also
how renewable work and how gas work; how peaks of demand comes and how the
reliability and continuation. You don’t
want to have electricity just when the sun is shining.

MR. MORNINGSTAR:
Thank you. And we’ll go to Marco
and then to Adnan and Tom, and Adnan promised me, by the way, that he would be
very controversial, so – (laughter) – I hope when we get to you, Adnan, that
you will live up to that given some of the comments that you’ve already heard.

So, Marco, where do you think natural gas is going? How does it fit into what you are doing with
Snam, some of the technologies that you are looking at such as hydrogen, and
what role do you see?

MARCO ALVERÀ: Thank
you. Well, first of all, thanks for
having us here, and you’ve set a high bar with asking this panel to have some
humor out of gas, which is – I never heard that before. (Laughter.)
And then you also challenged whether we can change the opinion of such a
well-informed audience, so you’ve really set the bar very high indeed.

I think gas has been always and will continue to be a very
regional market as opposed to oil, which is global, and so I will assume we
will have different bits of the questions you raised apply differently to
regions. So gas-producing regions have
very cheap gas. We went from 26 years of
proven gas reserves to well over 400 in the last 15 years, and this means that
gas, in most parts of the world, is going to be cheaper than oil, kind of
indefinitely. And so there is going to
be a huge oil to gas switch in transport, for instance, and in other oil uses
where gas is cheap.

And then you have the gas importing countries that are
paying the price of the logistics, which is very significant, and unfortunately
the big coal producers are the gas importers.
And the reason we need to get rid of coal is because switching today’s
coal to gas would save six billion tons of CO2.
We are spending globally 300 billion per year on renewables; in the last
decade we spent two-and-a-half trillion euros, and CO2 emissions are
rising. So there has to be an urgent
effort to get rid, as much as possible, of that coal. And this will only happen if we can lower the
cost of liquefaction.

And we don’t need new technologies; we kind of just need to
go back to the old technologies because, when I was in the upstream business, I
built a liquefaction plant – that wasn’t too long ago – for just over $200 a
ton, and that’s – you know, less than a third of what, today, it would cost to
build. So the effort has to be to compress
the cost of infrastructure and liquefaction, get natural gas into the
coal-consuming countries at a price point which makes a switch happen the same
way it happened in gas-producing countries like the U.S., and that’s the first
effort.

And then you have the new gases, so the energy transition
has really just been an electricity transition.
We haven’t really changed the world of molecules yet. And even IRENA would say that in 2050, you
know, just – (audio break) – and integrate renewables.

And I think what we need to do going forward is really
converge a lot more the world of electrons and the world of molecules. Hydrogen has the beauty that it can be
produced by electricity, but it behaves exactly like natural gas in many of its
applications. So the opportunity is to
really not only have natural gas as a balancing for the intermittence of
renewables, but really work much more at the sector coupling, integrating –
physically integrating some of these networks, and that’s what we’re doing in
Italy. We’re converting some of our gas
compressor stations from gas to electricity so that we take peak capacity out
of the electricity system when they have excess renewables and compress the
gas. We can turn the gas pipelines into
essentially a free storage instrument because we can put a lot more pressure
into the system.

So we’re doing this in Italy, around Europe, and as Snam,
we’re looking to countries like the UAE, and we’re working with players here to
try to replicate this model where the sector coupling is really happening. And the cost of storing hydrogen is 10 times
less than the cost of storing electricity, so there’s a very strong argument
that countries that have a lot of sun, or a lot of wind, or a lot of tide, or
whatever their kind of natural natural resource is, can use as much of that
natural natural resource to then be able to free up conventional hydrocarbons
to be exported to the countries that are still using coal.

So I’m sorry if I don’t have one solution, but I think gas
will play different roles in different parts of the world, and we’re certainly
going to see green gas compete with conventional gas where it’s sunny. And our research shows that we can lower the
cost of electrolysis, we can produce green hydrogen from solar in the next five
or 10 years at costs that are competitive with certain hydrocarbons, especially
where you have to import them.

MR. MORNINGSTAR:
Thank you very much, and your presentation reminds me, yesterday I
thought Fatih Birol had a very compelling presentation, and I was struck
particularly by the graph that basically said if we’re going to deal with
lowering emissions we have to take an all-of-the-above approach.

MR. ALVERÀ: Yeah,
that’s 21.

MR. MORNINGSTAR: And
he listed –

MR. ALVERÀ:
Twenty-one categories.

MR. MORNINGSTAR: – it
was 21. Yeah, 21 categories or whatever,
which, you know, a difficult task, but I found it a compelling slide.

Well, let me go now to Adnan. You know, it seems like we’ve had some, you
know, pretty reasonable presentations by the two first panelists, and you may
come from a somewhat different view – and love to hear it.

ADNAN AMIN: Well,
thank you very much, and let me say what a great pleasure it is to be here now
as a fellow. In the past you always
invited me. I would make a very bullish
speech on renewables, and leave. And the
predominant part of the audience is oil and gas people, and they would be
extremely frustrated because they wanted to take a few swings at me. So I’m here.
(Laughter.)

MR. MORNINGSTAR:
Although I think we – I think we actually do have today a very wide
diversity in the audience.

MR. AMIN: OK, well, I
thought you were setting me up.

MR. MORNINGSTAR: No,
no.

MR. AMIN: I’m happy
to do that. Like Donald Trump, I’m a
good counterpuncher. (Laughter.)

But let me say, you know, there has been – (audio break) –
you know, commercial interest to start to understand what the system of the
future that can guarantee sustainability for us will look like. And in this context, we have been talking
about, for the last few years, gas as the bridge. There is an inevitability about bridges – is
that sooner or later you get to the end of the bridge. And as we look at what is happening in terms
of economics, technology, geopolitics, I think the end of that bridge is
getting closer much quicker than we anticipated. And that’s for a number of reasons.

One is we thought that the advent of gas and its replacement
with coal – switching with coal was going to really decrease emissions. And as you said, there is a regional phase to
that which is, in the United States, replacing coal actually reduced
emissions. But if you look at global
emissions in 2018, they rose by 2.8 percent.
That was the highest rate of increase for carbon emissions for seven
years at a time when gas was entering the electricity mix in a very decisive
way.

So, you know, we have to start questioning all those
assumptions about what is happening with carbon, what is the optimum mix that
is going to get us there. We know, also,
that the economics of energy are changing dramatically fast. If you look at clean energy portfolios in the
United States, they have decreased in cost by about 80 percent in the last
decade.

Today, clean-energy portfolios are competing with new gas,
some around 80 percent lower than new gas, and the assessment is that, in five
to 10 years, it will be cheaper to install new renewable capacity than to run
existing gas plants. So this whole issue
of stranded assets is becoming something that has to begin to focus minds.

Then we have the geopolitical angle. You know, all this discussion about Nord
Stream and the malevolence of the Russians is actually covering the fact that
this is a competition for markets. There
is a massive competition between cheap U.S. LNG – you’ve installed all of this
liquefaction and you’re exporting to Europe – with Russian pipeline gas that is
being directly provided to European markets.
But that is happening at a time when the future of the gas market in
Europe is under question.

If you look at a number of countries, today in the United
Kingdom new renewables are beating any form of power generation. Take a country like the Netherlands. They have stopped their fracking program and
they’re moving into a very heavy concentration especially on offshore wind and
being part of this north European hub for wind generation. So with the advent of their new big deal or
the Green Deal or whatever it’s called now the targets for renewables have
increased exponentially, which means that the cost of installation of
renewables is going to decrease with scale.

The other argument about gas is that gas manages the
intermittency of renewables. Now, that
may have been true five years ago and it was an extremely important part of
enabling renewables to get to the new stage.
But we have a number of developments that are happening now and we are
seeing that large solar and wind installations, with local battery storage –
even in Australia they have grid-scale battery storage – is beginning to create
a framework for dispatchable renewable electricity. And the application of artificial
intelligence to the management and smart grid to the management of renewables
in the grid is creating a stability for that, and demand-side management is
allowing you to have an efficiency for the management of those systems.

If you look at a country like China, their application of AI
and smart-grid infrastructure, they rolled out, you know, half-a-billion smart
meters. Their state grid is the biggest
company in China, employs 2 million people, and their new transmission
infrastructure is state-of-the-art.

So we’re going to see a lot of this happening very fast,
very soon, and it’s going to be very disruptive to energy markets. But in the end if we are going to decarbonize
we need to address how all hydrocarbon sources can be used more efficiently and
less in the future. And you know, the
technological developments and the economic developments of renewables enable
us to do that today.

MR. MORNINGSTAR: Thank
you for the – you know, the responses to what’s been said already.

Let me ask you just as a follow up, if you’re right that in
fact new renewable generation is going to be significantly cheaper, won’t the
market make that determination? And will
it happen on its own?

Related to that, are you suggesting, as some of the
financing agencies particularly in Europe have suggested, that there should be
no more government financing of gas infrastructure? And would you go so far as to try and shut
off gas as soon as possible?

MR. AMIN: You know,
we only complain about subsidies when they’re applied to renewables. We never complain about subsidies when
they’re applied to fossil fuels. So I really
think it’s time to stop state support for fossil infrastructure. Makes no sense. Makes no sense economically and it makes no
sense environmentally. So that’s one.

But as an aside, I had a very interesting conversation with
the CEO of Equinor, a gas business. They
have this huge plan because, you know, the Nordics have this kind of guilt
complex – on the one hand we got very rich from hydrocarbons, but we are
actually green. So it’s like a very
guilty thing. So they’ve come up with
this idea where you can use your existing hydrocarbon resources to generate
hydrogen.

You know, the CCS, in my view, has been overplayed by many
analysts, and it’s not really a reality in most places because of the
geological formations you need. But in
Norway they have a very usable massive storage capacity under the continental
shelf under Norway. So they want to
store the carbon there and they want to use their existing gas infrastructure
to export the hydrogen. The only issue
there is that we still don’t know – you would know better than me – whether the
efficiency and the supply of electrolyzers at the scale that we need can come
onstream quickly enough. And the other
is the embrittlement of gas infrastructure potentially by hydrogen, which we
don’t know – at least I don’t know; maybe you have a better idea – how that can
be handled.

So we have green gas, potentially, green hydrogen
coming. I think generating hydrogen from
burning coal and fossil fuels makes no sense unless you have sequestration,
storage. But I think that in the future
what we’re going to see is that renewables are competing without subsidies in
the marketplace and are cheaper, and that new technologies are enabling the ability
to balance renewables in a grid in a way that we haven’t had up to now. So I think this is the game-changer that we
are seeing, and government policy needs to understand this and not protect
stranded assets in the future because we will end up paying a lot more for them
later on than we will today.

MR. MORNINGSTAR:
Great. I’ll make two quick
things. I would be good, I think, if we
could post the results of the poll and we can see what it is now, and then
we’ll do it again – do it again after the presentations are over and you hear
all of the presentations.

I also just might say – some of you may know what I’m
talking about, but – when talking about Norway, the third season of the series
“Occupied” is now on Netflix, and I would suggest it. Some of you may know. I won’t get into what it’s all about, but
take a look.

Here’s the – OK. Interesting,
it’s pretty close. Looks a little bit
like the polls in Iowa for the primary.
(Laughter.) They’re all so – take
a look at that. We’ll keep that up and
we’ll do it again a little bit – a little bit later.

Thank you, Adnan.
That was very, very compelling, your comments.

And now we’ll let Tom Earl respond.

TOM EARL: Well, I
think that’s a really – quite a good case for gas. I just think I’m under somewhat pressure – a
lot of pressure not to make it worse in the next few minutes while I – while I
speak. (Laughter.)

But it is a serious pleasure to be back here at the Atlantic
Council. This was – this is the second
year I’ve been here, and I note that we’ve somewhat moved up the agenda earlier
in the second day. And it’s also a
lovely thing that the amount of people in the audience, I can say, is about
five times what it was on the gas panel last year, so something really good is
happening. And it’s a real pleasure to
sit here again and an honor – an honor to be back.

Whether it’s – and there’s a lot of good things that have already
been said that we – that we would agree with as an LNG producer, a U.S. LNG
producer. And the case for gas I think
looks very rosy, and as I think the numbers there show, whether it’s for climate
change aspects, air quality aspects, or whether it’s for partnership with
renewables for some of the reasons that have been talked about by Fatima on
intermittency of renewables or whether it’s for the growing need for
electrification. I think yesterday Fatih
Birol made some really strong points, nearly a billion people still without
electricity, and then he showed a fascinating graph of the world’s energy mix
as it’s developed since the start of the last century. And you see this growing segment for gas as
it progressively displaces coal for a lot of the reasons that Marco mentioned
earlier as well. So I think those are
the – the general points for gas look very good.

But I certainly echo what Fatima was saying about the fact
that it needs to be – the growing role of gas has to come with the respect and
the application of the other aspects of gas to make it more acceptable. Maybe some of the points of fact that we’ve
seen on the – on the ground in the last 24 months or so as an energy – as an
LNG producer could be helpful to the – to the debate.

Firstly, on the demand side, if you look at the reaction –
the points of fact in the reaction of countries to gas and the role of gas
within their countries, we can pick a few sort of datapoints. The China aspect and the reaction of the
Chinese, the PRC and the NRDC in China, has been comprehensive as a shift towards
the – towards gas from their blue skies policy.
The China case is particularly well discussed, but as a point of fact
there is not a single regasification terminal – existing regasification terminal
in China that is not being expanded today.
So you could – and that’s not to speak of the new terminals they’re
building. So there is an extremely
strong case for gas – for LNG imports into China. Power of Siberia, the pipeline, not to forget
the Russian aspect in China, is also extremely important. But that shift of air quality for those that
went to Beijing 10 years ago and for those that go now, if you’re on the –
above about the 40th floor of any building in China you – in Beijing
you can now see the mountains, I would say, on eight or nine times out of 10
that you go there.

Regionally, as well, similar aspects in Taiwan. You see companies such as CPC, who have
contracted more liquefied gas from Cheniere, who are here, only just
recently. And that is because of the
shift in Taiwan towards more use of gas.

It’s going to be the same in Thailand. You see the expansion of the terminals in
Thailand as they make an active choice towards gas over coal. They’ve been particularly active on that.

You can see it in Brazil.
As a datapoint in the last – only in the last three or four months there
was a PPA auction, a power auction in Brazil where Brazil needs – particularly
in the north it needs gas to complement the intermittency of hydroelectric
power up in Pará in the north of Brazil.
They have conducted an active program, but very successful program in
Brazil which has shifted towards gas.

And then, you know without going on and on too much, you
start to see – and I think Minister Pradhan from India has been very vocal on
this in the last few months – you start to see a different activity in India on
natural gas as well. And I think Fatih
Birol just arrived here yesterday from India and he made some comments on that
yesterday, about the case for gas in India as part of the solution – only part
of the solution to solving the air-quality aspect in India.

The supply reaction is comprehensive on gas. You see enormous new financial commitments
not only in the U.S., as Ambassador Morningstar was just saying, not only
projects such as our own or Cheniere or Golden Pass from Exxon; you see a lot
of new investment in natural gas. You
see great investment in places like Mozambique, as well, on the supply side;
Canada; Russia, too. I think here in the
Middle East you start to see a reaction, as well, of increasing liquefied gas
capacity to answer the gas need.

Then lastly, as a small point, I think if you looked at the
gas industry – and this is really sort of – Marco’s very kindly set me up for
this quite nicely, and unplanned as well I might say – from an innovation aspect
you would think or one would think that the LNG industry is still trucking
along in its same old path or the way that we built projects in companies where
I worked in Total, for example, or the old-style projects are being built. But actually there’s a lot of – if you
scratch the surface of natural gas and LNG there’s actually a lot of innovation
going on. And it is a back-to-basics
aspect, as Marco said.

If you look at – and one datapoint on that is the work that
Baker Hughes have done in Italy with ourselves, where we – right now as we
speak in Avenza/Massa, which is a very well tried and trusted plant in Italy
with Baker Hughes, there is the world’s first factory-complete LNG train, which
is about halfway through construction.
And that standardization and that cost-cutting exercise is going to improve
the price of LNG, and therefore improve the competitivity of liquefied gas.

So there is innovation going on, as well, and
standardization getting traditional factory savings out of traditional factory-style
production, which is going to have a significant effect on the affordability of
LNG and drive down the price and enable it to compete with coal a bit – a bit
more.

MR. MORNINGSTAR: Let
me – these have all been really excellent comments so far. Let me ask a practical question, I think a
practical question. You know, we talk a
lot about Europe and you can argue about gas, both sides of the issue. And please come to our panel this afternoon
when we launch our report. But beyond
Europe, there – and it’s come up, I think, so far in this conference – there’s
a real conundrum to some extent between dealing with climate change and the
need to increase energy for those deprived of energy, how to deal particularly
in Asia. I thought that some of Fatih’s
slides yesterday were pretty scary, showing that there’s greater use of coal
today than there was 20 years ago. I
mean, I think that’s pretty shocking.

As a practical matter, can renewables and new technologies
satisfy all those needs? Or do we need
to have some gas infrastructure, particularly in Asia – and I’m sure Fatima Al
Nuaimi will have some comments on this, and probably Adnan as well. Don’t we need – I don’t want to make it a
leading question. Do we need gas
infrastructure particularly to deal with the coal issues in Asia, and that new
technologies can’t do it alone? Maybe
I’ll start with you, and then any one of you who want to address the issue.

MR. ALVERÀ: So I
think IRENA does an excellent report, and one came out a few months ago, and
they project there sustainable development scenarios. So I think out there it’s probably the most ambitious
renewable and new-technology scenario for 2050, and that still has about 48, 49
percent of the energy mix based on molecules out in 2050. So, A, that bridge to 2050 is not a short
bridge. And it’s not a complete bridge
because it’s still assuming there’s about 50 percent of molecules. Electricity’s starting at 20 percent
today. So that’s already a huge – a huge
task. And then the electricity itself
has to get green. So there’s two huge
tasks to get to that 50 percent.

So that remaining 50 percent of molecules today should
better be all natural gas, with the exception of hydrogen where there will be a
lot of sun. That can compete with
natural gas, especially if it’s imported, with the cost of electrolyzers coming
down. And as Adnan said, with let’s say
blue hydrogen, with CCS, where you produce gas.
So there’s no model out there that assumes that minimal role for gas,
even in 2050 that some people in the audience had vouched for or expect.

And so it’s a huge challenge. We do need all of the above. And there will be different solutions for different
parts of the world. If you produce upstream
gas at a cost of $1 or $2, then blue (coal ?) with CCS is going to be the
cheapest, especially if you don’t have a lot of sun. If you have a lot of sun, then green hydrogen
is going to be cheaper.

But let’s not make a mistake. I mean, what you can achieve in California
and Australia with batteries you cannot achieve in most parts of the
world. You need seasonal heating. You have huge swings of energy demand in
between seasons, and there’s no battery out there that can do that.

And let’s not kid ourselves that you can transport
electricity over long distances. The
transport of electricity today on average in the world is 50 kilometers and you
lose a lot of energy as you do that. And
so even people building the big offshore wind farms, they’re planning to
convert that wind into hydrogen to bring that onshore because they’ve decided
and tested and worked out it’s a lot cheaper than transmitting electrons over
greater distances.

MR. MORNINGSTAR:
Thank you. And let’s have some
brief responses. We only have exactly 11
minutes left and the people here, they will not be happy if we go over. So brief responses and then hopefully time
for a couple of questions.

MR. AMIN: I think
it’s exactly right. You know, when you
make this argument about decarbonization, a lot of people say, oh, you’re
arguing for 100 percent renewables.
That’s a completely fool’s paradise.
I wish we could get there, but that’s not feasible. So there’s going to be a mix. We have to ensure that that is the optimal
mix both for our social, economic, and environmental requirements.

Now, if you – if you look at what’s going to happen to the
carbon budget if we merely build out the gas infrastructure that we have
planned until 2030, is that we will not meet the two-degree target.

On the economics, I think that we are seeing more and more
new-build renewables. It is not only beating
gas; it’s beating coal. So there’s a
replacement potential.

You’re right, there – the issue of managing the flexibility
for renewables depends on a lot of things.
Battery storage is one of them.
But we are seeing more and more dispatchable electricity from renewables
that’s available at a cost that’s competitive in the market.

I think that green and blue hydrogen are going to be extremely
important parts of the mix. But they
will be a bridge because there’s a technological development going on today
that is underestimated by a lot of people.
I’m talking to a lot of technology companies, many of them incidentally
in China – and we need to be very aware that the investment in R&D in China
in these technologies has outstripped everybody. They hold almost twice as many patents in
clean energy as U.S. companies do today, and that’s an element of geopolitical
competition that we need to start focusing on for the future. But they have built ultra-high-voltage
transmission lines across thousands of kilometers, which minimizes the loss of
electricity. And you’re right, in
conventional – in conventional transmission we lose a lot of electricity once
you get over 50 miles or whatever. But
with ultra-high-voltage transmission, which is now being used for offshore wind
in Germany and in Northern Europe, you have minimized those losses. Then you have this AC to DC switching that
allows you to manage that electricity very economically.

So what I’m saying is that the disrupter here is going to be
technological progress, which is altering the economics of this paradigm on a daily
basis. And that’s the only way, I think,
that we can achieve the level of climate-safe world for the future that we
aspire to.

MR. MORNINGSTAR:
Fatima Al Nuaimi.

MS. AL NUAIMI: We’ve
always talked about renewable and gas being – playing a complementary
role. And I think we have to be
realistic, especially when we are talking about parts of the world that today
they don’t have access to the modern life, to the – to the basics. Those usually are parts that are very
price-sensitive. So the IEA slide that
shows that people are still investing in coal, because when it’s time to make a
decision, and especially when you’re at – trying to access to people who are
not the wealthiest of the world, so economics becomes the defining factor.

And I think the cost curve and how renewables evolved in
terms of their competitiveness is quite impressive, and that’s the role of
technology that’s playing. But, again,
storage is an issue. And that’s why
we’re saying the difference and the role that each source of energy is playing
is different, and we cannot just apply – it’s not a straight line all over the
year. It’s not a straight line in each
part of the world. So we will have to
have customized solutions and different energy mix, depends on where we are
talking about, which region of the world we’re talking about.

MR. MORNINGSTAR:
Good. I think that’s right. Your point on the cost of coal and people
screaming if they have to pay more than the alternative is important, and
that’s going to take strong government policy to deal with that issue but also
to develop the alternatives that are important.

And Adnan – Tom, did you want to add anything now, or? And then –

MR. EARL: Only very
briefly to say that one of the first jobs of gas is to improve its competitiveness,
to take the place as much as possible of coal for the – for that. But that’s –

MR. MORNINGSTAR:
OK. Adnan just briefly and then
we’ll have time for a couple of questions.

MR. AMIN: Just on
energy access, very glad IEA is in this space but we have been – we in IRENA,
we were working on this since the beginning.
In energy access, I’m the only one here from a developing country. I’m from Kenya. We have achieved 150 million people having
access to energy, coming below the 1 billion point for the first time, over a
10-year period largely because of standalone solar devices. Coal is not a solution for rural areas in
Africa. Gas is an important part of that
because we don’t have a solution for cooking.
So we can do lighting. We can
have a solar capability with efficient devices that can do some productive use
applications – TVs, whatever. But you
can’t do cooking. And the LNG part is
extremely important because replacing firewood and replacing coal for cooking
is going to be critical.

MR. MORNINGSTAR:
Critical, yeah. Right. And there is – and in the developing world
there’s a difference also because rural and urban needs and how to deal with
that.

Questions? Can we get
a couple of questions? We have four
minutes and 31 seconds. No questions? God, this is a shy crowd. We have a question in the back. John Roberts will always have a controversial
question.

By the way, can we also put the poll back up and can we
revote and see if there are any changes?
Please, for those in the back.

Q: How long do you
reckon it will be before we have large-scale commercial battery technology that
can ensure that renewables do not need gas as cover?

MR. AMIN: Great
question. It’s already happening in
different settings. You’re seeing grid-scale
application of batteries that are grid-competitive today.

But I’ve been talking to some of these companies. There’s one Chinese manufacturer I was in a
meeting with recently who was extremely upset about Elon Musk. He said, what is it about Elon Musk that gets
all this publicity? I’m building five
gigafactories, all of which are larger than his. My batteries are going to be cheaper, they’re
going to have higher energy density, and they are – they are going to be safer,
including batteries for electric vehicles.
Where, you know, the Tesla battery has a critical incident rate of about
one in 5,000, the Chinese guy is saying he doesn’t have any. So I think the innovation and the development
of battery technology is moving faster than anybody appreciates, and I say in
the next five years we’re going to see more and more locations where battery
technology, grid storage capability, integration of electric mobility into the
grid, V2G technologies is going to change the dynamic completely. So I would say another five, six years.

MR. MORNINGSTAR: You
had a comment, Marco?

MR. ALVERÀ:
Yeah. I just want to say when we
talk about batteries we need to really be – make a big distinction. One thing is to make sure that there’s energy
at night when the sun isn’t shining, and that’s a grid – and then there’s a
grid intermittency balancing. Another
thing is to think of a country like the U.K. or Italy or France or Germany
where you consume six times more energy in the winter than you do in the summer
and there’s not nearly half the amount of sun at that time. And there’s no battery solution out there or
envisaged that can cater for that seasonality.

So as I said, in California you have a lot of air
conditioning in the summer, not so much heating in the winter. Same in Australia. So you have kind of a flattish outlook. But when you enter into countries that
consume six or seven or eight, or some parts of China consume 30 times more
energy in the winter than in the summer, that’s not something that anyone is
planning to address with batteries.
That’s where you need hydrogen.
That’s where you need conventional storage, pumped hydro, and other
means. And that’s where the cost is
really making a huge difference. And
that’s where natural gas today and gas with CCS or hydrogen really, really
comes in.

MR. MORNINGSTAR: Can
we get the poll back up so that people can vote again, whoever’s handling the
screen back there? Please? Well, OK.
So you can all vote again.

And the last question goes to Branko Terzic, who’s also a
senior fellow at the Atlantic Council and former member of –

Q: Thank you. I’m older – I’m older than I look because we have
been in the gas industry in North America for about 200 years. The first hundred years the gas was used for
lighting and it was predominantly hydrogen.
It was town gas. Second hundred
years we went from lighting to heating, and now more recently electricity.

I wanted to talk about hydrogen. I was a little confused. Will natural gas, methane, be the source of
hydrogen in the future, or will it only be electrolysis of water? It wasn’t clear to me what you thought the
future there was. And once you have the
hydrogen, does that enable the fuel cell for transportation?

MR. ALVERÀ:
Yeah. So I think fuel cells will
certainly be the future because with one kilo of hydrogen you can drive a car 150
kilometers and you need a thousand kilos of batteries to achieve the same. So you’re actually moving weight around. And so – and so that will really work.

When it comes to which solution, it really depends on where
you are. So if you’re in the U.S. where
you produce natural gas at $2, it will be blue hydrogen. It’s going to be a lot cheaper than green
hydrogen. Where you are, like in a
country like where we are now, you can produce in the near future sun-induced
electrolysis, hydrogen – so green hydrogen – probably at a cheaper cost than
blue hydrogen. So it really depends on
what the upstream costs and what the sun level is. If you’re in the Netherlands you’re going to
have a lot of wind to – wind to green hydrogen with electrolysis. If you’re in Norway you may have blue, or in
Russia indeed blue.

The cost of an electrolyzer is a thousand bucks per kilowatt
today. And we’ve talked to all the
producers, and they say they can bring that down by six or seven times just by
scaling it up with no new technology. So
once that happens, you’re going to have hydrogen at 25 bucks per megawatt-hour
delivered wherever you want. So that’s
really when the revolution’s starting.
It can be in the next five years.

MR. MORNINGSTAR:
OK. We are now out of time, but
it’s a very interesting result that there is a change, a significant change on
number three particularly, where – that gas will enable – will enable and
integrate with key low-carbon technologies such as hydrogen. I think we got a lot of that from Marco, and
the comments also with Adnan I think were very helpful in that direction. And the – and the – but it’s also interesting
that gas as a bridge fuel displacing coal demand has gone down
significantly. And so very, very
interesting results It says that the
panel, which I think has been an extraordinary panel, have done – all of you
have done an excellent job, and want to thank you very much. And let’s all give the panel a good round of
applause. (Applause.)

Thank you, everybody.

(END)

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